Which? has welcomed news that the future of ‘free’ banking is to be investigated by a high-level committee of MPs.
The Treasury Select Committee said it is to hold an inquiry into the issue alongside that of competition within the banking sector.
A separate inquiry into private equity funds will also take place, amid concern over asset stripping.
The Committee’s inquiry into free banking comes after the introduction of current account charges by First Direct last month
Current account charges
The move – a first in the banking community – was followed by comments from the incoming boss at Nationwide, the UK’s biggest building society, indicating that charging for such services could be fairer than the current system.
UK banks have come under increased pressure in recent months over their charging policy.
The Office of Fair Trading (OFT) is currently looking into the issue of overdraft charges amid allegations that customers are being hit with unfair penalty fees for going over their agreed borrowing limit.
At present, bounced payments and unauthorised lending can lead to charges as high as £35 – despite campaigners claims that the real cost to banks is as low as £2.50 to £4.50.
If – as expected – the OFT demands a cap of charges, it is feared that financial institutions could look for a way of recouping the loss.
Many are predicting that one knock-on effect could be the end of ‘free’ banking in the UK.
Speaking about the inquiry, Which? policy adviser Dominic Lindley said: ‘We welcome this announcement. We want to see a retail banking market that is transparent, competitive and delivers good outcomes for the consumer.’
A spokeswoman for the British Bankers’ Association said: ‘We are happy to co-operate with the inquiry in any way we can.’
If you want to claim a refund of unfairly high ‘default’ charges – charges made for bouncing a cheque, say, or for exceeding your overdraft limit – you can use the Which? banking charges site.
Tens of thousands of consumers have already used our website in their battle to claw back unfair charges.
Which? has produced a complete set of web resources to help consumers win their money back. Our banking charges site includes:
- information on why the charges may be unenforceable in law
- a factsheet on how to use the small claims court to gain redress
- template letters to challenge the banks.